New consumer protections for prepaid cards

[Omaha Steve]

Source: AP-EXCITE

WASHINGTON (AP) — The Consumer Financial Protection Bureau is extending many of the financial protections of bank accounts to prepaid cards.

New rules proposed Thursday by the federal regulator would require that prepaid card users be protected against fraudulent charges and provided with free monthly billing statements. The rules come as more Americans are using "reloadable" prepaid cards as a substitute for checking accounts. Consumers have gone from loading less than $1 billion onto their cards in 2003 to nearly $100 billion through 2014.

More than 2 million households without bank accounts relied on prepaid cards last year, according to a survey by the Federal Deposit Insurance Corp. The cards can be used to make payments, store funds, make ATM withdrawals and receive direct deposits. The market has also expanded to include electronic services such as PayPal and GoogleWallet, CFPB director Richard Cordray noted in a speech to be delivered Thursday in Delaware.

"Many of these prepaid consumers are living paycheck to paycheck, and are engaged in a constant battle to make ends meet," Cordray says in a prepared text of the speech.

FULL story at link.



FILE - This Feb. 15, 2010 file photo shows Visa prepaid cards at a Duane Reade drug store in New York. New rules unveiled Thursday, Nov. 13, 2014, by the Consumer Financial Protection Bureau would protect prepaid card users against unauthorized charges and provide them with monthly billing statements. (AP Photo/Candice Choi, File)


Read more: http://apnews.excite.com/article/20141113/us-cfpb-cards-35d812b731.html

[JimDandy]

1. Will card holders now be required to give a street address

to receive the free billing statement for the card, or just an email address? At first blush it looks like it might help people like those McDonald's employees who were being paid with these cards, but will this actually be just one more way to track people financially and gather more data on them under the auspices of helping them?

ETA the new protections:
--Consumer's responsibility for unauthorized charges will be limited to $50.
--Potential fees must be disclosed in "easy-to-understand" forms.
--Currently more than half of prepaid cards analyzed by the CFPB charge a fee to view statements. ----
--Slightly over 2 percent of cards charged traditional overdraft fees when the charges are greater than the amount of money on the card. CFPB rules would end this practice.
--People who use their prepaid cards as credit cards would have 21 days to repay any debts before being charged a late fee.

"If the new regulations prove to be too costly, it's possible that some financial companies will stop issuing prepaid cards, said Nessa Feddis, senior vice president of consumer protection and payments at the American Bankers Association."

[JimDandy]

2. Kick for the later crowd... n/t

(oh nuts...meant to kick OP)